Sales TQM Page 1
AD
ADAD
ADAPTING TOTAL QUALITY MANAGEMENT TECHNIQUES TO THE
APTING TOTAL QUALITY MANAGEMENT TECHNIQUES TO THE APTING TOTAL QUALITY MANAGEMENT TECHNIQUES TO THE
APTING TOTAL QUALITY MANAGEMENT TECHNIQUES TO THE
DISCIPLINE OF SALES LEAD MANAGEMENT
DISCIPLINE OF SALES LEAD MANAGEMENTDISCIPLINE OF SALES LEAD MANAGEMENT
DISCIPLINE OF SALES LEAD MANAGEMENT



Sales TQM Page 2

Executive Summary All too often, organizations will continue to drive the notion that somehow sales personnel
are to be measured qualitatively in the short term and by revenue output in the long term.
The idea that we should utilize standardized processes for manufacturing and
technology, yet sustain a laissez-faire method of management towards our sales
teams is not only antiquated but has been detrimental to the well-being of our
economy as a whole. This paper will examine many TQM (Total Quality Management)
techniques as they are applied to the manufacturing discipline, their purpose, and how
they can translate to increased productivity as well as sustainable, quantitative
measurements in sales organizations within any vertical market.
According to the Bureau of Labor Statistics, the average American productivity increase
since 1949 has decreased steadily. While this means we are still improving how we work,
we are steadily losing ground. A popular study done by America Online and Salary.com
several years ago backs up this data by indicating the amount of time wasted by age
group each day of work per individual.
Year of Birth
Time Wasted Per
Day
1930-1949
0.50 hrs.

1950-1959
0.68 hrs.

1960-1969
1.19 hrs.

1970-1979
1.61 hrs.

1980-1985
1.95 hrs.

Source: Salary.com

While these are simply correlating data, it is an indication that our economy is
sorely underutilized and its performance is struggling as we move from a majority of blue
collar manufacturing production to an increasingly large sales workforce. Most of the great

continues to provide dinner, the spearhead stays intact. Unfortunately, it often takes a
misstep by the sales group—a missed quarter, a blown projection, or a lost deal to
suddenly and backwardly attempt to repair the damage. Current methods of “control” are
often the equivalent of dialing a thermostat left to right without seeing the temperature-
simply a guess based on instinct and feelings.
This has resulted in the unnecessary raising of marketing budgets, reduction of staff,
pointless and often unobtainable sales goals, as well as alarmist reactions translated into
inflated budgetary projections, allowances, and cutbacks. Roaming targets set by worried
sales executives simply translate to longer hours on the sales floor, an over anxious (and
Sales TQM Page 6

soon to leave) sales team, and ultimately a cutback in personnel in order to meet
whatever “seems” to be the right number this quarter. This may sound overly comical,
unduly harsh, or simply counterintuitive to our expectations. However, the fact is that
many of these organizations are being run by someone skilled in “anything” other than
sales.

Lead Management is Not a Skill Held by Most Business Owners
According to statistics from the Small Business Administration, 99% of all American
businesses are small, with an average of one location and 10 employees. This sector is
responsible for over half of the non-farm workforce in America and the entire net gain of
1.86 million new jobs in 2004 (the most recent year data is available). We can reasonably
infer that the majority of business owners 1) did not start their shoe store, software
company, mortgage brokerage, insurance branch, cookie manufacturer or other specialty
concept because they were skilled at utilization of sales leads and were simply looking for
an outlet for this managerial ability and 2) the typical 10 person shop is going to have a
sales staff run by the owner or, more likely, a moderately skilled former salesperson.
Either of these two facts is grim if we are expecting a disciplined sales process,
appropriate management techniques, and procedural adherence over extended periods of
time to come from our largest business sector.


Understanding TQM Methodology- a Primer

Total Quality Management, as it is called, is the concept of reducing waste from a
process. Typically it is structured within a manufacturing setting with the goal being the
highlighting, removal, and resolution of waste within a given process. It is meant to make
the machine, assembly line, worker, or team as productive, efficient, and streamlined as
possible.
While TQM is agreed to be a conceptually lofty goal, it is nonetheless, a target that is
always attempting to be reached. Arguably no organization has completely removed
waste in toto, but this is one of the more salient points regarding the process—it is indeed
a continual process designed to be a recurring and always present reminder of what
should be as opposed to simply what is.
It is hard to argue with the success of the methodology as it has been utilized over the last
half century. Countless organizations, most notably Toyota, and consequently many auto
industry giants, have seen enormous savings through implementation and by creating a
culture wherein TQM can be embraced. GM has seen $9 Billion in savings through only
three years of system implementation.
Sales TQM Page 9 Does TQM Translate To Sales?

In order to determine whether the methodology will actually be an effective tool within a
sales environment, it is necessary to find symmetry of problems between Manufacturing
and Sales groups. If, in fact, there are similar problems, then we can reasonably assume
that the solutions may indeed fit.

in which the worker is continually making their workstation efficient by ensuring its
cleanliness, order, and standardization.
Sales TQM Page 11

Implementation: The first S, Sorting, speaks to the necessity of the worker to maintain an
environment with only the most essential items present. We can think of this not only in
our desk area, office, but also, more significantly, our computer desktop. How does the
sales person organize their email inbox or the important documents that are used
frequently? Sorting is clearing the work area of only essentials. While we may find it clever
or entertaining to see sales personnel with various basketball hoops, games of chance,
dartboards and other implements of time abatement, one would probably question their
presence on or around a tool and die machine in a factory. This illustrates a common
paradigm—why is it acceptable for a sales production worker to have these types of
“escapes” yet unthinkable for a manufacturing production worker? One is led to
believe that if it is unproductive for one group of producers, it is likely unproductive for the
other, no matter what the prevailing assumptions may be.
Sales TQM Page 12

The second S, Straighten, or Set in Order, is about maintaining a “clean” environment to
achieve the goal of simplifying the process, quick response to client and prospect, ease of
use, and quality control. Straightening minimizes the problem of shuffling through papers,
throwing away important articles, or wasting time by having to find emails, names, contact
information, or various data. Sorting is the first step in organizing and managing the work
environment.
The third S, Shining, refers to a continual (daily or periodic) maintaining of the order and
cleanliness of the workstation. When sales people finish their work each day, their
workstation (computer, desktop, files, etc) should be arranged so that work can be
Sales TQM Page 14

Technique: SMED
SMED is an acronym for Single Minute Exchange of Die. This may be one of the most
remarkable advances that the Lean / TQM Method brought to industry. The history and
definition will give you a good understanding of how the concept works, but the real life
practice that we can all relate to will certainly make this technique crystal clear.
SMED began by Shingeo Shingo for Toyota in the late 1950’s. The issue was with large
production machines that needed to make multiple products (ex.—a left and a right side
body molding) but each product had a certain production run before the next could be run.
The downtime between production runs was due to changing over the dies in the
machines. Shingo found there was a way to reduce the downtime to less than 10 minutes
(or single digit minutes) to change over the dies, thereby greatly reducing downtime from 8
hours as was typical to less than a few minutes!

Sales TQM Page 15

We see this technique every Sunday during racing season for NASCAR. A pit stop is a
perfect example of SMED principles. It is about eliminating every second of down time and
maximizing every second the wheels are not turning. Pit crews are able to change 4 tires,
fuel a car, clean windshields, and other various tasks, all in less than 25 seconds. How did
Toyota and NASCAR do it? Is it only about simplifying the process or are there

periods will maximize the time spent in direct communication with the client, or to continue
the analogy, more production time and less downtime.
Many companies currently perform SMED on a small scale—whenever someone calls for
a “Power Hour” or a block of time dedicated to the phone, they are implementing the
principles of SMED. Imagine how much more efficient these teams would be if they were
able to remove the external processes inhibiting them to make all day a “Power Hour”?

Technique: Just In Time (JIT) Inventory

By definition, JIT is an inventory strategy that aims to ensure only enough materials on
hand to meet the current needs. It is necessarily averse to carrying costs of any inventory
sitting on shelves. The argument is that if you are warehousing materials, you are paying
Sales TQM Page 17

for the warehouse space, the warehouse personnel, the liability of spoilage or damage,
the possible overrun, as well as inefficient cash management by replacing cash on hand
that could be earning interest and placing it in warehouse shelves, translated as raw
material, which bears no economic fruit until it is a finished product.

In a Lean environment, the storage of raw materials is looked at with as much disdain as
holding trash or other waste. It serves no economic purpose and can only be termed a
liability as it relates to an efficient and effective production line.
Within a sales environment, as has been put forth prior, this paper equates sales leads
and prospects as raw material. They are the pieces that go into creating the finished good-
a closed deal. Therefore, we can examine the way in which sales leads are treated by
organizations and find efficiencies in JIT inventory of these “raw materials”.
Sales TQM Page 18

A sales organization can begin to gain efficiency in their lead inventory by ensuring a
policy of immediate utilization. Surprisingly, many organizations do not immediately

raw materials can be presented to the production worker. In a Push environment, raw
material usage by production is determined by the availability or production level set by an
external manager.
The rationale for this method of distributing raw materials is based on pre-set levels of
inventory (leads), purchasing behavior, and supply levels. Pull distribution is based on
demand by the production staff driving the supply chain to fulfill the production needs.
Each have advantages but the Push method is considered to be a less efficient and
cumbersome method due to the following—changes in supply, changes in demand,
bottlenecks, and other production issues take longer to see and react to in a Push
environment than they do in a Pull.
As it relates to a sales team, we have typical paradigms that are borne out in the Push
method and taken for granted as the most effective way to distribute leads. However,
when examined in light of Pull, the Push method is found to be lacking. Push distribution
of sales leads necessitates that pre-set levels of marketing and ad buying determine the
pace and work load of the production (sales) team. In most organizations that utilize sales
leads, the overarching practice is either a set number of leads for each sales agent per
Sales TQM Page 20

day (based on how many leads are being purchased) or it is simply an ad hoc reaction to
the number of leads coming into the system from the various channels. Both are
reactionary and do not effectively utilize the raw material (leads).
In a manufacturing setting, if raw materials enter the production area too quickly, there is a
bottleneck or the material ends up being improperly utilized, thereby creating waste. As
sales leads are pushed to various sales personnel, decisions about efficient use of the raw
material are then left to the end user—the sales team. An illustration of this can be found
in a very popular, old episode of I Love Lucy in which the main character works in a
chocolate making factory. If we envision each chocolate candy as a sales lead, we can
easily see the problem with Push methods with regards to sales leads.
compared to their peers? Or are they taking too many leads and not following through
properly in order to maximize potential? The sales manager can examine behavior in this
manner to determine performance problems as well as opportunities. 2) Marketing spend
can be greatly reduced as managers find true levels of performance and capability,
thereby allowing raw material purchase to match true demand and allocation levels.
Pull allocation of sales leads is the most effective manner because it ensures that usage
drives distribution and allocation.
Many managers would at this point say that it is haphazard to put the level of profit
responsibility in the hands of the sales team. While this author surely does not throw away
or minimize the efficacy of measurement using quotas and sales goals, one can rightly
oppose this argument by indicating that through Pull methods, true measurement of
ongoing sales performance can be seen without looking through the prism of standardized
expectations and workloads.
True sales performance is not simply measured by revenue dollars created through closed
sales, but when performed correctly, it should also be a measure of how effectively raw
materials and resources were used. Only the Pull method will give managers a clear
understanding of this entire picture.
Sales TQM Page 23 Technique: Work In Progress (WIP)

One cannot define WIP much better than using the term itself. WIP refers to work that is in
process and unfinished. It is by TQM standards an unwanted entity and in its worst form,
most definitely, considered to be waste. Total Quality Management views WIP as a poor
allocation of resources. Whenever something is not being used directly in the current
manufacturing process then it is representative of 1) risk / liability 2) potential spoilage and
3) a misuse of funds that could be bearing interest if it was still liquid.
Sales TQM Page 24


What, then, is to be done with sales lead WIP? Reducing it and managing becomes very
important, but 1) most organizations will currently have an abundance of it and 2) there
will always be a lingering level of WIP to manage. Just as in manufacturing, the goal of
WIP is to very quickly use it in the process to reintroduce it to the production process.
Many plants that I have worked with will break the WIP down to usable parts in other
processes so that the components are then utilized, if not the whole.
Can this be done with sales leads? To an extent, yes, but more importantly it is about
recognizing the WIP, and addressing it at the organization level by 1) moving it to a
separate team that focuses solely on driving it to a decision, 2) placing it into a drip email,
direct mail or other communication vehicle that will reduce manpower and further effort
until the client initiates, or 3) much like reallocating, driving the client to a different product
even if it is at a different profit margin. Is the WIP stalled and an outlier to the standard
time process because they are hung up on price? Drive them to a less expensive model
so that the WIP is eliminated as well reducing potential of spoilage (lead loss because
they go elsewhere for a deal), reduced manpower, as the sales team will no longer focus
time and effort, as well as making WIP profitable by putting into the production process,
albeit at a different level (the same as breaking it down to component parts and
reallocating). WIP is the proverbial Moby Dick—the big fish that too much time, effort, and
resources are spent on trying to land, when in fact, if the team would focus on strictly the
ones in production, then efficiency, revenue, and utilization will soar.